Kenny Rogers sues Capitol Records

Country-pop star joins chorus of digital royalty complaints

Pop-country star Kenny Rogers has added his name to a growing list of heritage artists suing their labels for digital royalties with a suit filed against Capitol Records in federal court in Nashville on Monday.

The action alleging breach of contract and unfair competition was lodged by attorney Richard Busch, who also filed a suit against Capitol on behalf of the estate of the Knack’s drummer Bruce Gary in December (Daily Variety, Dec. 28).

Like most of the other pending suits, Rogers’ action reflects an appellate court decision in F.B.T. Productions’ suit against Universal Music Group and Aftermath Records.

That decision found that F.B.T., which produced Eminem’s earliest recordings, was entitled to much higher digital royalties based on rates for masters licensed to third parties (Daily Variety, Sept. 7, 2010).

However, Rogers’ suit also alleges a variety of other accounting abuses by Capitol, and thus was not filed as a class action.

It involves royalties for recordings made under 1975 and 1977 contracts with United Artists Records, Capitol’s predecessor in interest. During this period, the singer’s top-five pop hits included “Lucille,” “She Believes in Me” and “Coward of the County.”

Action follows a 2007 audit on Capitol’s books performed by Rogers. It claims that the vocalist was underpaid in excess of $400,000, and that the label failed to respond to the artist’s written objections.

Suit alleges that Capitol failed to pay a 50% royalty specified contractually for what the 1977 contract refers to as “non-disc records.” It alleges that the label received “substantial income” from download and ringtone licenses to iTunes, eMusic, Verizon Wireless and other suppliers.

It also claims that Capitol distributed free goods in foreign territories without accounting for or paying for them; failed to report record club income; wrongfully withheld foreign taxes; deducted inappropriate video costs; and failed to account for foreign broadcast income.

Capitol also allegedly failed to distribute monetary awards to Rogers stemming from lawsuits against Napster, Kazaa, Grokster and other pirate sites.